On June 25,Nintendo briefly surpassesd Sony who has dominanted the game industry for decades in market capitalization.

Nintendo joined global household names such as Toyota Motor Corp., Honda Motor Co. and Canon Inc. on the list of the 10 most valuable Japanese companies before its shares erased earlier gains and ending the day lower.

The Kyoto-based company finished in the 11th place in market value, sandwiched between Panasonic maker Matsushita Electric Industrial Co. at the bottom and Sony on top -- the world's largest and second-largest consumer electronics makers each having sales more than eight times as big as Nintendo's.

"It is becoming quite clear that Nintendo is taking back its market share from Sony in the console market while well defending its stronghold of portable games," Mizuho Securities analyst Takeshi Koyama said.

Nintendo's Wii game console has outsold Sony's PlayStation 3 by three to one in Japan and by more than two to one in the United States so far this year, according to game magazine publisher Enterbrain and research firm NPD.

Demand for its DS handheld game players also far outstripped that for Sony's PlayStation Portable.

Mizuho's Koyama said, however, that investors should watch out for a possible pull-back after two year-long bull runs.

"This is one of those companies that is not exactly making daily necessities. One negative factor and shares could take a dive. We need to be careful in dealing with shares like this," Koyama said.

Shares in Nintendo rose as high as ?6,350, a record high, in the morning session, boosting its market value to ?.57 trillion ($53 billion) and narrowly surpassing Sony's market capitalization.

Virtuous circle

Nintendo, however, closed down 0.8 percent at ?5,100, bringing down its market value to ?.39 trillion, a touch below Sony's ?.48 trillion.

Sony shares have put on 66 percent over the past two years, outperforming the Nikkei average, which rose 57 percent. But Nintendo shares soared nearly fourfold over the same period.

Nintendo has offered a slew of innovative and easy-to-use game software such as "Brain Age" and "Nintendogs."

The division, however, is estimated to report a much smaller loss for the current business year, and profits at its mainstay electronics unit will likely grow sharply, led by brisk demand for its Bravia LCD TVs.

"I don't think this is a case of Sony being in bad shape as a company. Rather, Nintendo is doing well with the Wii," said Soichiro Monji, chief strategist, equity management department at Daiwa SB Investments.

By: DocMemory
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